Once the new Wall Street bailout legislation was released to the public by Congress, pundits and citizens alike plowed into the house.gov website. Sunday afternoon, presumably because of high traffic, the website was not accessible for many. In the late evening only a summary file was available. The actual legislation file was not viewable, duly noted with the stately notice “the file is damaged and could not be repaired.” So much for getting any real news direct from the source or the media. Other “helpful” media links merely directed John Q. Public to the same official document with the same result. Does anyone have a copy of the draft legislation? Heaven forbid that such a thing was intentional. Perhaps Chinese hackers are to blame.

The summary of the Emergency Economic Stabilization Act of 2008 was short on details, in which unquestionably the devil resides. The old news is that $700 billion will be designated to the Secretary of the U.S. Treasury for buy bad mortgage securities. The recent Republican contribution “allows” companies to insure troubled assets.

The legislation requires the Treasury to modify the troubled loans involved in the failed securities to allow some Americans to keep their homes. This process has been widely discussed for more than six months with little real result or prospect of streamlining the process. How will the U.S. Treasury manage such a large job and save homeowners in foreclosure from losing their homes? “Wherever possible” is the key word of the day, insuring that very little will be done by the Treasury. Instead, homeowners have hope through improving the HOPE for Homeowners program through HUD. The idea, once again, is to help more families to keep their homes. Once again, we are classicly short on details or provisional government motivation.

can of worms?

Part 3 highlights taxpayer protection with idea that taxpayers should not be expected to pay for Wall Street’s mistakes. This statement prevents a tea party. As a bonus for being bailed out, warrants will insure that taxpayers will benefit from future growth enjoyed as a result of participation in the program. Interestingly, the draft legislation intends that the President is responsible to submit legislation to cover losses to taxpayers resulting from the program.

Part 4 covers windfalls or golden parachutes for executives. They won’t walk away with millions in bonuses. Companies are projected to lose “certain tax benefits” and may be required to limit executive pay. Unearned bonuses must be returned. What determines “unearned” and the resulting enforcement is a huge question mark.

Finally, the federal government assures strong oversight in the draft legislation. Financial provisions indicate that the U.S. Treasury will not receive the funds at one time, starting with $250 billion, and followed up by the president as funds are needed. The Treasury is required to issue a report every sixty days. EESA establishes an Oversight Board that cannot act in an arbitrary manner and includes a special Inspector General to secure against fraud, waste and abuse.

Obviously, the legislation has good points and seems to take plenty of precautions. The reality is that the liquidity crisis is an accounting crisis bolstered by destructive decisions and pandering politics. More troubling is that trusting the government to properly handle legislation once it has passed has become a large question mark based on past performance. Trust has to be built and the nation is short on that right now. The morally-bankrupt weak-kneed Congress wants to restore that trust. Just considering that the nation must elect a Senator to be President is enough to give one pause to think. ~ E. Manning

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